What is an index?
by SMO Team
What is an index?
An index is the summary of several companies, which are selected by a set of rules.
An index is the aggregation of several companies. The companies can be given an equal or different weighting in the index.
An index can contain various topics. Here are a few options:
- Companies are added to the index by market capitalization of different geographical areas.
- Indices can represent different companies in a sector, an industry or a subject area. The possibilities are many.
Major Stock Indices
The best-known indices in the world are the stock indices of the major economic regions.
The largest companies in the industrialized countries are summarized in various stock indices. The indices differ in the number of companies they contain. Each index has its own entry requirements.
The picture shows the most important indices of the largest industrialized countries.
The development of these indices is shown under History & Average Profits.
Indices cannot be traded directly on the stock exchanges. But there are ETFs that track the respective index. Indices can be traded indirectly via these ETFs.
Summary
Stock indices are a collection of companies. The major stock indices include the largest companies in the world. The inclusion criteria of companies may differ from index to index.